A debit refers to an asset or expenditure whilst a credit refers to income or a liability. Cash being an asset and therefore a “debit” is often confused because individuals know money in their bank account is a credit. Both are correct – but the important thing to note is that each look at it from their perspective. From the bank’s point of view, it is a credit because the money belongs to you. It is the same as debtors and creditors. A debtor (debit) is someone who owes you money (e.g. the bank or a customer). A creditor (credit) is someone to whom you owe money (e.g. a supplier).
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